(Adds CFO, CEO details from Investor Day)
By Dominique Vidalon
PARIS Oct 5 AccorHotels is banking on its
online business and expansion in the luxury hotel sector to
boost earnings after a planned sale of most of its property
business, CEO Sebastien Bazin said on Wednesday.
AccorHotels which has 3,900 hotels ranging from
budget Ibis to luxury Sofitel, competes with InterContinental
, Marriott and Starwood and is undergoing a
reorganisation initiated by Bazin, who took over in August 2013.
Luxury hotel operators can earn profit margins two to three
times higher than those of budget hotels. AccorHotels has also
expanded its digital expertise to respond to fierce competition
from online travel agents which has hit margins.
Bazin's first move was to press for raised profitability by
reorganising AccorHotels into two units -- HotelServices and
HotelInvest. That split its operating and franchising business
from its real estate and asset management activity.
The $2.7 billion acquisition of FRHI Holdings, owner of
London's Savoy and New York's Plaza hotels, could lift the
contribution from the luxury sector to the earnings of the
HotelServices division to over 50 percent by 2020 from 15
percent, Bazin told an investors meeting.
"The integration of FRHI Holdings is on track in terms of
timing and synergies," Chris Cahill, head of luxury brands, told
AccorHotels has said that the FRHI deal would boost earnings
starting from the second year, with 65 million euros in cost
The group recently announced plans to turn HotelInvest into
a subsidiary ahead of opening a majority of its capital to
institutional investors to raise cash for the group's
After the sale of HotelInvest, whose assets are estimated
to be worth 6.5 billion euros ($7.3 billion), AccorHotels could
double its Earnings Before Interest and Taxes (EBIT) margin by
2020 from 11.9 percent in 2015, Chief Financial Officer
Jean-Jacques Morin told investors.
As part of the restructuring, Bazin has expanded the group's
business in China and strengthened its digital expertise with a
flurry of small deals to fight the rising challenge of companies
such as Airbnb and online travel agents Expedia and
Last month AccorHotels said it was launching a youth hostel
brand called Jo&Joe to tap the spending power of young adults in
a high-growth sector.
The group's ambition is to generate by 2020 some 30 percent
of its revenue from these new businesses, which notably include
concierge service John Paul and British serviced home rental
AccorHotels is also seeking to limit a push by top Chinese
shareholder Shanghai Jin Jiang International to
increase its 12.6 percent stake in the company.
To do that AccorHotels started talks with Jin Jiang and
other shareholders Eurazeo and Colony focused on board
organisation and shareholdings, a source told Reuters in June.
Bazin told reporters on Wednesday there was nothing new
regarding the Jin Jiang situation.
"No good news and no bad news", Bazin said, adding he would
meet Jin Jiang representatives in China next week as well as
officials from other Chinese companies.
($1 = 0.8922 euros)
(Reporting by Dominique Vidalon; Editing by Keith Weir and